Well I guess you could say if Google is gonna get into this space, then all with be looking and wanting to follow.
A couple of interesting things I see in this space unfolding – one around the opportunity for targeted, relevant advertising ( with a bit of social location thrown in for good measure) and the second for a robust solution that tackles the area of fraud. Maybe device fingerprinting from a company such as Bluecava could provide a solution that tackles both these areas. Let’s see….
The race to make mobile payments mainstream is one of the most competitive contests in the wireless industry, pitting telecom operators against credit card companies, payment processors, handset makers and operating system providers. With its May 26 announcement that it is poised to launch a national mobile commerce network (using its Android phones), Google now appears to be in the lead.
The service, called Google Wallet, will store credit cards in electronic form on Android phones. Users will be able to pay for purchases by wirelessly “tapping” their handsets against special readers in participating stores. Users can also receive targeted offers, such as coupons for products they have bought in the past or have indicated they like, directly on their phones while in stores. Loyalty rewards will be automatically tallied within Wallet and receipts will be electronic, as well, popping up on the phone instead of printing out on paper.
Merchants have already started testing the setup and will begin trials in San Francisco and New York City before expanding nationally this summer. American Eagle, the Container Store, Macy’s, Subway, Toys “R” Us and Walgreens are part of the initial group of retailers that will support the system.
As the name Wallet suggests, the app will support a variety of different cards, including credit cards, loyalty cards and gift cards. At first, Google Wallet will only work with Citi MasterCards, since both companies are Google Wallet launch partners. Users can also opt to load money onto a prepaid, Google-hosted card that can be funded by another type of credit card. Google says it will add more cards over time and hopes to eventually include other types of ID and passes, such as drivers licenses, event tickets and electronic hotel keys.
Retailers, says Google, will benefit from a corresponding service called Google Offers that will enable consumers to search for special offers and save them to their Google Wallet. Those stored coupons can then be redeemed by tapping a Wallet-equipped phone at a cash register or showing the phone screen to a cashier.
Merchants will be able to customize incentives based on a customer’s location and transaction history. A particularly frequent customer can receive a higher-value deal than a less loyal customer, for instance. Google Offers will go live in Portland, San Francisco and New York City this summer.
Google also plans to support location-based “check-in” offers, offers that are placed like ads in Google searches and offers that are situated in Google’s local business/maps service, Google Places.
Using a cellphone as a wallet is convenient but could be risky. Google says its Wallet app contains multiple levels of security, including a phone screen lock and a required Google account and pin number. The search giant also says credit cards are encrypted on a secure element within the phone and never fully displayed.
Part of the security comes from a chip developed by European semiconductor maker NXP, which collaborated with Google on its latest flagship smartphone, the Samsung-made Nexus S. That chip also enables Google Wallet to communicate wirelessly with all the various Wallet partners, via a technology called NFC (near-field communication).
Google’s vision appears similar to strategies espoused by organizations like ISIS, the mobile commerce startup backed by AT&T, T-Mobile USA and Verizon Wireless. New York-based ISIS is about a year behind Google, though it may have an advantage in being compatible with a greater variety of phones once it launches.
During Google’s Thursday New York event, its Vice President of Payments, Osama Bedier, argued that Google is “uniquely positioned” to roll out a mobile commerce program because of its wide-ranging partnerships forged through Android and its search and advertising businesses. Bedier, who was a top executive at eBay’s PayPal until January, noted, “This has to be an ecosystem; it can’t just be one company.”
Bedier also acknowledged Google’s lead in the mobile payments race by adding, “This is not just an idea or announcement…this is up and running.”